Snowmobilers face trail permit hikes as insurance costs soar

OFSC News Release
Barrie, ON., October 12, 2001

The cost of trail liability insurance has soared by 700%, but permit prices will increase by only about 8%. That’s the good news from the Ontario Federation of Snowmobile Clubs for snowmobilers who have been on tender hooks since September when the possibility of a $30 increase rocked the industry. The fee for 2002 seasonal trail permits is now expected to increase by only $10, to $130 if purchased on or before December 1, 2001 and $160 thereafter. One Day and Seven day Permits , remain at $30 and $90 respectively.

“At the time of the OFSC Annual General Meeting in September, we were confronted with a totally unmanageable premium increase potentially as high as 883%,” commented OFSC President Dennis Burns. “But we promised clubs to keep on working to find a better deal and by the beginning of October, were able to reduce it by about a million dollars, while maintaining the same good level of coverage. It’s still a massive 700% increase, but it won’t be as hard a hit.”

The OFSC trail liability insurance is critical to the existence of snowmobile trails, because it provides coverage to landowners, clubs, volunteers and the OFSC itself in the event of claims arising from land use, trail use or club activities. The OFSC had planned to maintain permit prices at the same level as the past two winters, budgeting double the amount for the trail liability premium out of projected permit revenues. When the premium unexpectedly sky-rocketed by 700%, there was no choice but to pass some of the additional cost on to riders. The entire amount of the $10 increase goes directly to pay for the liability premium.

“Through existing permit revenues, the OFSC is covering 40% of the total premium increase,” continued Burns, “but the other 60% simply cannot be squeezed out of a system that has been perennially in the red for trail operations, so it was either raise the permit fee or close as many trails as it took to reduce overhead enough to make up for the shortfall and the premium increase, and no one wanted to do that.” Burns also went on to say that given the claims history, the OFSC would be irresponsible to divert resources from trail maintenance and improvements which are a vital components of reducing risk in the future.

According to insurance experts, the premium increase is a consequence of four inter-related factors. One, with the economic down turn over the past year, insurance has become a ‘hard’ market as underwriters retrench and reduce their exposure to risk. Two, many recent mergers and acquisitions in the insurance industry have reduced the number of companies who write this kind of business, making the market less competitive. Three, the tragic events of September 11th have made insurance companies even more cautious given the estimated multi-billion claim hit they are likely to take. And four, snowmobiling has developed an unacceptable claims ratio in recent years that have moved it into a higher risk category.

“For the past decade, the OFSC has been, and continues to be, the recognized world leader in innovative, comprehensive and pervasive snowmobile safety programs.” commented OFSC Safety Coordinator Cyndi Hodgson. “While most snowmobilers are getting the message, riding responsibly and making smarter choices, a few riders still take unnecessary risks and make foolish choices — then expect to have their negligent or law-breaking behaviours compensated through trail liability insurance, so everyone ends up paying more.”

While the permit increase is a short term fix, the OFSC has set up a Risk Management Committee to develop and implement strategies to meet the long term challenge of continuing and affordable insurability. Meanwhile, the OFSC reminds snowmobilers that they are required by law to purchase their own personal snowmobile liability insurance to cover risks and claims arising from their own actions while riding.

The Ontario Federation of Snowmobile Clubs is dedicated to providing strong leadership and support to member clubs to establish and maintain quality snowmobile trails which are used in a safe and environmentally responsible manner to further the enjoyment of organized snowmobiling.